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USDC SDNY
ORrGrNAL
DOCUMENTELECTRONICALLY FILED
UNITED STATES DISTRICT
COURT
DOC#:
SOUTHERN
DISTRICT
OF
NEW
YORK
DATE FILED:
Ii-
%S-II
: x e - - - - - - - - - - - - ~ - .
_
...
-----
....
~
WPIX, INC.
I
et
al.,
09 C .
10366
(LLS)
Applicants,
-against-
OPINION
AND ORDER
BROADCAST
MUSIC, INC.
Respondent.
x
The
quest
on
Broadcast
Music,
Inc.
's
("BMI")
motion
is
whether
the
Decree
under
whi
it
operates
requires
it
tofer
to
broadcasters
the
II
carve
out"
license
whi
U.S.
v.
Broadcast
275
F.
3d
168(2d
Cir.
2001)
("AEI
")
held
BMI
must
offer
to
non
broadcasters.
The
"carve out"
license
is
a
blanket
license
providing
access
to
BMI's
whole
repert
of
musi
works
for
the
whole
period
of
the
license,
butwith
a
speci
pricing
mechanism
which
reduces
the
the
licensee
pays
to
BMI
based
on
the
proportion
of
the
licensee's
performances
of
BMI
music
for
whichhe
obtained
an
alternate
license
for
whichhe
is
paying
composer
or
publisher
rect
BMI
argues
that
it
no
obligation to
offer
broadcasters
a
"carve-out
I
license,
and
that
AEI
decision
is
inapplicableto
this
case.
AEI
involved
applications
by
non-broadcasters,
and
ired
construction
of
the
BMI
Decree's
provisions af
ecting
non-broadcasters.
BMI
Decree
has
specific
provisions
affecting
broadcasters
thatclearly
preclude
a f
ng
that
BMI
must
provide
the
form
of
license that
the
Local
evision
Broadcasters
are
ng.
Case 1:09-cv-10366-LLS Document 38 Filed 04/28/11 Page 1 of 8
 
(BMI
Feb. 15,
2011
Mem.
(
"BMI
br.")
2 0 . )
Background
The
background
of
the
dispute
is
set
forth in
the
AEI
Opinion,
275
F.3d
at
171-72:
BMI
is
one
of
the
largest
performing
rights
organizat
in
the
country.
It
grants
licenses
to
music
users,
collects
license
fees
from them,
and
distributes
the
royalties
among
its
affiliated
copyrightholders
("Affiliates").
Its
Affiliates
comprise
approximately
250[000
songwriters,
composers,
and
publishers[
and
its
catalog
includes
about
three
Ilion
mus
works.
Applicants
Muzak
LLC
and
AEI
Music
Network,
Inc.
provide
music
environments,
often
referred
to
as
"background
music
services
[II
to
various
commercial
clients
such
as
restaurants
[
retailers[
department
stores[
offices,
and
supermarkets.
The
services
are
provided
either
by
delivery
of
discs
or tapes
to
the
clients,
or
by
satellite
transmission.
In
1941[
the
United
States
brought
separate
antitrust
suits
aga
BMI
and
its
main
competitor[
the
American
Society
of
Composers
[
Authors
and
Publishers
(HASCAP"),
for
unlawfully
monopolizing
the
licensing
of
performing
rights.
Both
suits
were
settled
by
consent
decree.
United
States
v.
Broadcast
Music,
Inc"
1940-43
Trade
Cas.
(CCH)
~
56[
096,
381
(E.D.
Wisc.
1941)
i
States
v.
Am.
Soc'y
of
Composers,
Authors,
and
Publ'rs
("ASCAP"),
1940
43
Trade
Cas.
(CCH)
~
56,104,
402
(S.D.N.Y.
1941) amended
[
1950
53
TradeCas.
(CCH)
~
62,595,
63[750
(S.D.N.Y.
1950)
(HASCAP
Decree"). In
1950,
the
ASCAP
consent decree
was amended
to
establish
a
"rate
court"
mechanism,
which
enabled
the court
to
set
fees
for
1
icenses
when
1
icense
applicants
and
ASCAP
could not
come
to
agreement.
United
States
v.
ASCAP,
195053
Trade
Cas.
(CCH)
~
62[
595,
63[
750
(S.D.N.Y.
1950)
The
government
brought
the
instant
suit
against
BMI
in
1964, and
the
parties
entered
into
a
consentdecree
two
years
later.
United
States
v.
Broadcast
Music,
Inc.
,
1966
TradeCas.
(CCH)
~
71,
941[
83[
323
(S.D.N.Y.
1966),
amended,
No.
64-CV-3787,
1994
WL
901652[
at
*1
(S.D.N.Y.
Nov.
18[
1994) (1996
1
Trade
Cas.
(CCH)
~
71,
378)
("BMI
Decree"
or
"decree")
The
BMI
Decree
places
a
number
of
specific
restrictions
on
BMI. Among
other things,
the
decree
prohibits
BMI
from
itself
publishing,
recording or
2 
Case 1:09-cv-10366-LLS Document 38 Filed 04/28/11 Page 2 of 8
 
distributing
music
commercially
(Section
IV
(B)
),
from
refusing
to contract
with
a
potential
affiliate
(Section
V(A)),and
from
discriminating
between
similarlysituated
licensees
(Section
VIII)
.
The
decree
specifically
requires
that
BMI
grant
certain
types
of
licenses.
Section
VIII
(B)
requires
that
BMI
license to
any
broadcaster
"the
rights
publiclyto
perform
its
repertory
by
broadcasting
on
either
a
per
program
or
per
programming
period
basis,
at
[BMI's]
option"("per
program
license").
Section
IX
(C)
prohibits
BMI
from
refusing
to license to
"music
users
other
than broadcasters,lI
such
as
Applicants,
a
license
"at
a
price
or
prices
to
be
fixed
by
[BMI]
with
the
consent
of
the
copyright
proprietor
for the
performance
of
such
specific
(i.e.,
per
piece)
musical
compositions,
the
use
of
which
shall
be
requested
by
the
prospectivelicensee"
("per
piece
I
").
In
addition,
Section
IV
(A)
prohibits
BMI
from
preventing
writers
or
publishers
of
a
composition
from
directly
licensing
their
work
to
a
music
user.
Traditionally,
the
BMI's
license
of
choice
has
been
a
"blanket
license,"
a
license
that
grants
the
licensee
access
to
BMI' s
entire
repertory in
exchange
for
an
annual
fee.
In
Applicants'
case,
that
fee
has
alwaysbeen
based
on
the
number
of
licensee's
locations
that
use BMI-licensed
works,
i.e.,
on
a
"per
premise"
basis.
The
BMI
Decree does
not
specifically
mention
the blanket
licensei
however,
BMI
has
historically
offered
it
and
Applicants
have
recently
held
blanket
licenses.(alterations
in
original.)
The
AEI
Holding
As
the
Second
Circuit
held
in
AEI,
id.
at
171:
We
conclude
that
Applicants'
request for
a
blanket
license
subject
to
"carve
outs"
constitutes
a
request
not
for
a
new
type
of
license,
but
for
a
blanket
license
with
a
different
fee
basis,
over
which
the
district
court
has
rate-setting
authority
and which
BMI
must
offer.
In
pOinting out
that
the
addition
of
Section
XIV
in
1964
established
the
rate
court
and
added
the
new
provision
that
an
applicant for
"the
right
of
public
performance
of
any,
some
or
all
3 
Case 1:09-cv-10366-LLS Document 38 Filed 04/28/11 Page 3 of 8
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